Bankrupt US retailer to sell consumers' data

26 Mar 2015

The term "Radio Shack" doesn't fit among Asian electronics retailers, but old-school geeks from North America know it well. "The Shack" was often the first (and sometimes the only) place to go for electronic supplies and products including personal computers. Whether you wanted batteries, a breadboard for your microprocessor-synth project, or a shortwave radio antenna (for the radio setup in your backyard shack, thus the name), they'd probably have it in stock.

Even in the dotcom/mobile era, some Radio Shack outlets served as hubs for North America's DIY enthusiasts, as outlined in this article from Wired Magazine. Wired describes RadioShack’s chief in the 60s and 70s, Charles Tandy, as a "cigar-chomping Texan ... the kind of eccentric, larger-than-life executive that any modern PR handler would keep tightly muzzled." Tandy, whose family specialized in the leather-working trade, bragged to analysts in the mid-1970s: “We are in the do-it-yourself business.”

And in 1977, Radio Shack released the TRS-80, among the first mass-produced, fully assembled PC. Before IBM or Atari, the TRS-80 (affectionately called the "Trash 80" by aficionados) formed the nexus of one of the few personal computer ecosystems anywhere.

Boom to bust
This week, Radio Shack is in the news again: after 94 years as a retailer, the firm went bankrupt last month. According to Wikipedia, the company had 4,297 US stores, of which 1,784 are slated to close, with 274 stores in Mexico and "an additional 900 locations operated by independent dealers, primarily in small towns."

And now we have an issue unique to the cyber-age, according to Bloomberg: "The company included personal data in its bankruptcy auction as its own asset class."

Personal data on the auction block?
How much personal data? "A website maintained by Hilco Streambank, which is serving as an intermediary for RadioShack, says that more than 13 million e-mail addresses and 65 million customer names and physical address files are for sale," said the Bloomberg story. Another source, CBS New York, describes the data trove as "information they have on some 117 million customers, including names, addresses, phone numbers and other details on purchases."

The plot thickens. Bloomberg reports that Texas Attorney General Ken Paxton filed a challenge last week which "argues that RadioShack made an explicit promise to its customers not to sell their personal data ... the filing cites text from a sign displayed in RadioShack stores reading: 'We pride ourselves on not selling our private mailing list'.”

State law in Texas prohibits companies from selling personally identifiable information in a way that violates their own privacy policies (in the USA, states have their own set of laws which co-exist with federal laws). Texas is a unique US state not only because of its size (both area and population) but because it was a separate country for a brief period: after gaining independence from Mexico in 1836, the Republic of Texas existed for about a decade before joining the USA. The original Embassy of the Republic of Texas still stands in central London—it's easy to imagine a cigar-chomping Tandy descendant standing in front of this classic structure, arms folded, declaring: “We pride ourselves on not selling our private mailing list.”

Enter the hedge fund
Bloomberg reports that Standard General, a hedge fund which is RadioShack’s largest shareholder, won the auction. Standard General has said it will try to keep the retail chain operating on a smaller scale.

But what about the data? “People are looking at Radio Shack now and they are gonna vilify Radio Shack,” said consumer expert Paul Viollis on CBS New York. “But at the end of the day, Radio Shack isn’t doing anything all other major corporations haven’t been doing for many years.”

“When you go shopping the proprietor is not entitled to any personal information outside of the information you need to effect that transaction,” said Viollis. “So if they are going to ask you anything additional, the answer is absolutely not.”

Which is an interesting strategy in the age of data analytics and the data-magnets we call mobile phones. Then again, consider that an established retailer which collected data on its customers for years no longer owns the data, which is being sold at auction press time, we simply don't know.

Is data privacy now measured on a sliding scale?

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